Nabilah S
The Republic of Palau has unveiled a collaboration with Ripple to pilot the USD-backed Palau stablecoin. This stablecoin is set to be issued on the XRP Ledger, with the primary aim being to enhance privacy and security in transactions and improve the liquidity of tokenized digital assets.
The Republic of Palau partners with Ripple for a USD-backed stablecoin
Per the announcement, Palau will utilize the Ripple CBDC Platform for this venture. The platform provides a comprehensive solution enabling central banks to issue digital currencies (CBDCs). The Ripple CBDC platform will generate PSC as a digital equivalent of Palau’s official currency, the US dollar.
Palau will have the capacity to oversee and tailor the lifecycle of this stablecoin, encompassing procedures like transactions and distribution. Each PSC will hold a value equivalent to one USD, underpinned by a 1:1 reserve in fiat currency, and will be issued on the XRP Ledger.
The operational model of this stablecoin mirrors those of other reserve-backed private stablecoins, such as USD Coin (USDC) and Tether (USDT). The Ministry of Finance for the Republic of Palau will play an instrumental role in this initiative, overseeing the system and facilitating the issuance and redemption of stablecoin units.
Empowering citizens to access financial services
Surangel S. Whipps Jr, the President of the Republic of Palau, expressed that digitizing the national currency marked a significant stride in stimulating the economy and streamlining government procedures to enhance financial transactions and empower the populace. He emphasized Palau’s innovative approach and commitment to the stablecoin launch.
“We trust Ripple’s extensive experience with CBDCs and blockchain technology, as well as the carbon-neutral XRP Ledger, to assist in creating our national digital currency that will bring greater financial prosperity to our citizens,” the president stated.
James Wallis, the VP of Central Bank Engagements for Ripple, acknowledged that the blockchain firm was delighted to collaborate with the Republic of Palau on this project. Wallis pointed out that Palau’s responsibility would include fostering business expansion by providing a unified platform for creating and managing digital currencies. Moreover, he stated that the stablecoin would enable Palau to reduce its carbon footprint and susceptibility to climate change impacts.
In the initial phase of this pilot project, government employees in Palau who have volunteered for the program will receive an allocation of PSC for use during the pilot phase.
The Palau stablecoin is anticipated to provide numerous benefits to its citizens, businesses, and the government. The stablecoin will encourage financial inclusion and diminish transaction fees for citizens. It’s also set to reduce currency costs while accelerating transaction processing speed.
The press release indicated that the PSC is envisaged as a secure and efficient monetary instrument to bolster commercial activities across Palau. The success of the first phase of this controlled pilot will be determined by various factors, including establishing a secure and reliable mint. Furthermore, it will facilitate the acquisition of goods and services and simplify the payment process.
